1. Market Research
  2. > Energy & Environment
  3. > Energy
  4. > Oil and Gas Energy Market Trends
  5. > Russia Country Risk Report Q3 2016

Russia Country Risk Report Q3 2016

  • May 2016
  • -
  • Business Monitor International
  • -
  • 53 pages

Core Views President Vladimir Putin’s popularity remains near record highs, although we expect this to moderate as economic hardship continues to be realised by the general public. Despite the deterioration in living standards, we do not expect any mass uprising in response to the deteriorating economy. Persistently low oil prices, fiscal austerity, weak investment growth and declining real incomes will lead to second consecutive real GDP contraction of 1.2% in 2016, followed by only a modest recovery to 1.5% growth in 2017. Russia’s long-term growth potential is subdued, closer to that of mature developed economies rather than a higher growth emerging market. This is due to the highly centralised nature of the economic model and large government footprint in key sectors, reliance on energy exports, poor business environment, weak investment growth and lack of structural reform momentum. Russia’s external position will remain a bright spot for the economy despite a fall in the price of its main commodity exports, with the current account surplus remaining in relatively robust surplus in the coming years as imports remain subdued.

Over the coming quarters we expect little financing pressure to emerge in the economy as its large international reserves position remains sufficient to entirely cover maturing external obligations during 2016/2017. While Russia’s fiscal position is bolstered by very low public debt ratios and fiscal reserves at its disposal, the sovereign profile will deteriorate in the coming years and major fiscal reforms – such as an overhaul of the pension system – will be necessary to ensure long-term sustainability of the public finances in light of lower commodity prices. Major Forecast Changes We have downgraded our real GDP growth forecast for 2016 from -0.7% to -1.2%, for 2017 from 2.3% to 1.5% y-o-y.

Table Of Contents

Russia Country Risk Report Q3 2016
Executive Summary 5
Core Views5
Major Forecast Changes5
Key Risks5
Chapter 1: Economic Outlook 7
SWOT Analysis 7
BMI Economic Risk Index 7
Economic Growth Outlook 8
Import Substitution Failing To Boost Growth8
Real GDP in Russia will contract for a second consecutive year in 2016 before seeing only a modest recovery in 2017 The failure of
rouble depreciation and import substitution policies to meaningfully stimulate production in non-energy sectors highlights the difficulties
Russia will face in diversifying the economy and generating higher growth amid subdued oil prices
GDP By Expenditure Outlook 9
TABLE: GDP GROWTH FORECASTS10
TABLE: PRIVATE CONSUMPTION FORECASTS10
TABLE: GOVERNMENT CONSUMPTION FORECASTS10
TABLE: FIXED INVESTMENT FORECASTS10
TABLE: NET EXPORTS FORECASTS11
Currency Forecast 11
RUB: Recovery Will Run Out Of Steam In 201711
A steady rebound in oil prices will drive rouble appreciation against the US dollar in the remainder of 2016 Beyond the short term,
however, we believe Russia's poor macroeconomic fundamentals will become a more important driver of the currency, underpinning a
longer-term depreciation
TABLE: BMI CURRENCY FORECAST11
Monetary Policy 13
CBR Vigilant On Inflation, Will Not Rush To Cut Rates13
The Central Bank of Russia (CBR) will start a monetary easing cycle in H216, but its overall policy stance will remainhawkish in line
with a firmer commitment to taming inflation Nevertheless, the central bank's 40% inflation target will remain elusive this year and
next
Monetary Policy Framework 14
TABLE: MONETARY POLICY FORECASTS 14
Fiscal Policy And Public Debt Outlook 15
Fiscal Position Now Permanently Weaker15
Low oil prices, weak growth and the inability to tap foreign capital markets due to Western sanctions will lead to wider average fiscal
deficits and a depletion of reserve buffers in Russia, although a small public debt load means default risks are very low Significant fiscal
consolidation is unlikely in coming years, given upcoming elections in 2016 and 2018
Structural Fiscal Position 17
TABLE: MAIN REVENUE and EXPENDITURE CATEGORIES17
External Trade And Investment Outlook 18
External Surplus A Key Support To Sovereign Profile18
Russia's current account will stay comfortably in surplus over the coming years despite lower oil prices, remaining a key source of
macroeconomic stability amid weaker growth and a deteriorating fiscal position
TABLE: BALANCE OF PAYMENTS FORECASTS19
Outlook On External Position 20
TABLE: CAPITAL and FINANCIAL ACCOUNT BALANCE20
TABLE: TOP 5 GOODS IMPORTS21
TABLE: TOP 5 GOODS EXPORTS21
Chapter 2: 10-Year Forecast 23
The Russian Economy To 2025 23
Long-Term Economic Stagnation Without Reforms23
Russia's growth potential is much lower in the next decade than it has been in the previous 10 years, dragged down by the country's
commodity dependence, rapidly ageing population and prolonged slump in investment However, the biggest drag on growth will remain
the state's tight grip on key sectors of the economy and society more broadly, and lack of meaningful progress towards a more liberal
economic system
TABLE: LONG-TERM MACROECONOMIC FORECASTS23
Chapter 3: Political Outlook 27
SWOT Analysis 27
BMI Political Risk Index 27
Domestic Politics 28
Putin To Weather 2016 Election Test; Big Domestic And Foreign Challenges Loom28
Russian President Vladimir Putin's sky-high popularity suggests that he will contain public dissatisfaction with falling living standards in
the September 2016 parliamentary elections However, the government's challenges will continue to escalate, even as the economy
recovers in 2017 Externally, EU sanctions will be extended beyond July 2016 and relations with the West will remain strained over both
sides' military activities in Eastern Europe
TABLE: POLITICAL OVERVIEW28
Long-Term Politics Outlook 31
Putin Facing Far Greater Challenges Over 2016-202531
President Vladimir Putin will face tougher political challenges over the coming decade as a result of a deterioration in relations with the
West, a weaker economy, ongoing demographic decline and the Islamist insurgency in the North Caucasus Although Putin's popularity
stood at near record highs through much of 2015, economic disruption means that his support will fall and that he will face increased
opposition later this decade
Chapter 4: Operational Risk 35
SWOT Analysis 35
Operational Risk Index 35
Operational Risk 36
TABLE: OPERATIONAL RISK36
Economic Openness 37
TABLE: TOP 5 IMPORT PARTNERS and PRODUCT IMPORTS, 2010-2014, USDMN 38
TABLE: FREE TRADE AGREEMENTS38
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES 40
Availability Of Labour 43
TABLE: EMERGING EUROPE - AVAILABILITY OF LABOUR 44
TABLE: LABOUR FORCE EMPLOYMENT BY SECTOR ('000), 2010-2011 46
Chapter 5:BMI Global Macro Outlook 49
Global Macro Outlook 49
Tentative Stability, But New Risks Emerging49
TABLE: GLOBAL ASSUMPTIONS 49
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %50
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %51
TABLE: MACROECONOMIC DATA and FORECASTS53

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Veronica

+1 718 514 2762

Purchase Reports From Reputable Market Research Publishers
Crude Oil Flow Improvers Market by Type, Application, Supply Mode - Global Forecast to 2021

Crude Oil Flow Improvers Market by Type, Application, Supply Mode - Global Forecast to 2021

  • $ 12000
  • Industry report
  • September 2016
  • by MarketsandMarkets

“Rise in crude oil production worldwide drives the COFI market” The global market size of COFI is estimated to reach USD 1.73 billion by 2021 from 1.32 billion in 2016, at a CAGR of 5.5%. Excessive ...

Industrial Plugs & Sockets Market by Protection, Type, End-User - Global Forecast to 2021

Industrial Plugs & Sockets Market by Protection, Type, End-User - Global Forecast to 2021

  • $ 6328
  • Industry report
  • October 2016
  • by MarketsandMarkets

“The industrial plugs & sockets market is projected to grow at a CAGR of 4.82% from 2016 to 2021” The industrial plugs & sockets market is projected to reach USD 3.60 billion by 2021, growing at a ...


ref:plp2016

Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.